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Alliance, Inc. sells gas lamps to consumers through retail outlets. Total industry sales for Alliance's relevant market last year were $100 million, with Alliance's sales representing 5% of that total. Contribution margin is 25%. Alliance's sales force calls on retail outlets, and each sales rep earns $50,000 per year plus 1% commission on all sales. Retailers receive a 40% margin on selling price and generate average revenue of $10,000 per outlet for Alliance. a. The marketing manager has suggested increasing consumer advertising by $200,000. By how much would dollar sales need to increase to break even on this expenditure? What increase in overall market shares does this represent? b. another suggestion is to hire two more sales reps to gain new consumer retail accounts. How many new retail outlets would be necessary to break even on the increased cost of adding 2 sales reps? c. A final suggestion is to make a 10% across the board price reduction. By how much would dollar sales need to increase to maintain Alliance's current contribution? d. Which suggestion do you think Alliance should implement? Explain your recommendation.
q.consider the following extended classical economy in which the misperceptions theory holdsad y 300 10mp.sras y ? p
Identify what type of unemployment each of the individuals below is facing by dragging and dropping the appropriate term into the bins provided. Frictional Unemployment / Structural Unemployment / Cyclical Unemployment
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Suppose that in our economy represented by sectors A and T as described in class (A is capital intensive and T is labor intensive; both produce under constant returns to scale), there is a positive production externality (for instance knowledge spill..
How will planned investment spending change as the following events occur? The interest rate increases as a result of Federal Reserve policy.
A book printing company operates under zero-profit condition in a competitive market. Suppose this company invents a new production technology which reduce its average total costs in the process of printing. If the new production technology is protec..
The optimal rate of pollution occurs where
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To speed relief to isolated South Asian communities that were devastated by the December 2004 tsunami, the U.S. government doubled the number of helicopters from 45 to 90 in early 2005. In terms of “production” of relief, what kind of return to scale..
A new machine will cost $100,000. Net cash flow before depreciation and taxes are $250,000 per year for 5 years. The machine would be depreciated (straight-line) over 5 years with no salvage value. What is annual net cash flow after depreciation and ..
Using the IS-LM model, examine what happens in the short run to interest rate, income, consumption, and investment under the following. Support your answer with the appropriate logic and graphs
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